Archive for the ‘shares’ Category

A lot of speculation, and some hype. Stories of bankruptcy, and riches. A relatively not-my-cuppa-tea (kareem’s quote) venture. Seems to be promising, very bullish. Darn, did i miss out any? Well, how does this work? How do i learn more, quick, and better? As they say, the best way to learn something is by ‘doing it’.

Well, i didn’t wanna burn my fingers, at least after my dad quoting a few times from his knowledge ‘Horse racing gives immediate results, stock trading does so a little slower’. Come on, times have changed, isn’t it? See the way market has gone in the last few years.

Social networking got me to first hands on experience of the market, not on Sensex but on NYSE and Nasdaq. FSX had a pretty good interface, with real index quotes live from NYSE and Nasdaq, and provided 10 million dollar virtual money to start off. Soon i started on Equity challenge by ET for trading on Sensex. Cool huh, starting off virtually on a real wave!

The image on the left shows a screenshot of the FSX page.

Initially, i started off investing based on the performance of the share on that day, a week, 6 month, and 1 year prior to that. Slowly i started gaining insight into the companies i was investing, reading info from experts. The first few stocks i bought were GOOG(Google), GYMB(The Gymboree corp), and SHI(Sinopec Shanghai Petrochemic). I sold them soon. Today, the they gain i would have made from these stocks (if i held since i bought) are about 25% from Google, -8% from Gymboree, and a whooping 48% from Sinopec! From August to October, in mere two to three months, gaining 65% is something unthinkable.

Stock trading is a lot of fun, just like gambling. May be one could take a little more calculated risk in this, if you know how to calculate that is. It draws you towards it, makes you put in more, and more. You got to be careful in the game to win. Over these few months i have learnt a few things about it, and here i put them down.

Few lessons i learnt:

1. Never trade on very short term.

This is true especially for rookies like me. Invest and wait, have patience. It sure will pay to play in long term.

2. Information is wealth.

Get to know the company well, present targets, strategy, initiatives etc as much as possible. Building a strategic investment plan is the key.

3. If something can go wrong, it surely will.

If you buy a share at 52-week low there is no guarantee that it will not go further down. More likely that it does so. So wait, average it out if it goes too low.

The converse is also true. That is, if a share is at 52-week high don’t hesitate to invest, it can go further up.

4. The above lesson gives a lemma. Markets are sooooo unpredictable, the more time you spend there the better you will realize this.

5.You win some times, you lose at others.

6.Have a risk appetite, know it well. Don’t get carried away.

7.Diversify. It works for your best, averaging your losses, and of course profits as well.

8. More importantly, you don’t get 10lacs or 10million when you trade in reality, and you cannot reset if you make huge losses. So, invest cautiously.

9. Indian market in a way follows the American market, though not always and not exactly.

10. Read all the lessons one more time. :P

Well, these are a few points i wished to write, there are more lessons to learn i am sure. One interesting thing i have observed in this stint is that,

Anyone can make money when the market is going up, it’s more challenging to make money when the market is going down. I have not been able to do this successfully. Hopefully i get better at this, soon.